On 11 and 12 September 2024 RFCS NSW attended the Financial Counsellors Association of NSW (FCAN) Conference in Sydney. This flagship annual event brings together most of the agencies providing financial counselling in NSW to obtain information and discuss sector issues, trends, policies and practice standards. It is also an important networking and professional development exercise. This year’s agenda included presentations from key agencies in the sector – the Australian Financial Security Authority (AFSA), Australian Financial Complaints Authority (AFCA), Australian Taxation Office (ATO), Financial Rights Legal Centre (FRLC), Financial Counselling Australia (FCA), Moneycare, Seniors Rights Service and the banks and various individual speakers on topics pertinent to our clients and service delivery model. Some of the key points raised from the conference were:

Statistics and trends

• At the peak of the Global Financial Crisis (GFC) there were 37k insolvencies per annum. The current annual rate is 12k less.

• Most bankruptcies are renters with less than $50k debt.

• The key driver of financial hardship is employment status.

• There has been significant growth in and loss from scams. In 2023-24 AFCA received 59k complaints – an increase of 11 per cent from 2022-23. Of the 59k, 10k related to scams. This is an 81 per cent increase from 2022-23. The ACCC report Australians are lost $2.7 billion to scams last year. Most scams come from organised crime syndicates.

• AFCA also reported an increase in complaints regarding buy now pay later and pay in four providers. They are advocating for reform and regulation in this part of the financial market and have reported systemic issues to APRA and ASIC where they have evidence of consumer harm from lack of formal regulations in this space.

Policy and strategy

• The ATO is increasing its effort in debt recovery. Currently there is some $50 billion in outstanding debt of which 70 per cent relate to small business. Consequently, the ATO is the biggest referrer to the Small Business Debt Helpline.

• The Attorney General is undertaking extensive reform of Australia’s bankruptcy laws. Key changes proposed are increasing the threshold for involuntary bankruptcies from $10,000 to $20,000, with the threshold to be indexed each year, increasing the timeframe for response to a Bankruptcy Notice from 21 days to 28 days, debt agreements no longer to be considered ‘an act of bankruptcy’ and reducing the period for which a discharged bankruptcy is recorded on the National Personal Insolvency Index to seven years. In addition to these proposed changes, the Attorney-General’s Department has begun consulting on introducing a Minimal Asset Procedure in Australia.

• AFCA’s monetary limits are $1.2 million per claim and $631,500 for compensation. The ePayments Code determines liability for unauthorised scams. Most providers are signed up to the code.

• AFSA has developed a new Education and Outreach team to provide education to key stakeholders, co-developing policies and products and protect against system misuse as part of the strategic direction to better protect and assist vulnerable consumers. AFSA will also focus on investigating poor creditor conduct with a particular lens on reviewing creditors that are under performing for clients and/or providing untrusty worthy advice.

• The banks are deploying significant resources – biometrics, encryption, multi factor authentication and AI to protect clients and themselves from scams.

• The House of Representatives Standing Committee on Economics inquiry into insurers’ responses to 2022 major floods claims is scheduled to table its report in parliament by 18 October 2024. The high cost of insurance and payouts by insurers are expected to be the key issues responded to.

• Expressions of interest for delivery of the Commonwealth Financial Counselling program from 1 July 2025 for five years are expected to be announced in the coming weeks/months.

Service delivery

• A FCAN members wellbeing report is about to be released. The results are not satisfactory particularly in the human resource management area.

• A Bankruptcy Toolkit was launched in May for counsellors and other stakeholders.

• As required by the Banking Core of Practice banks have a customer advocate office to support clients in hardship. Key actions these offices undertake include working with financial counsellors on moratoriums, partial payment arrangements, loan restructuring, debt waivers and settle for less arrangements.

• The National Debt Helpline (FCA) have a new ICT system for booking counsellors. Ave completed a trial in the Northern Territory where referrals were booked directly to available Financial Counsellors. It will be rolled out in South Australia this year and Eastern States early next year.

• Case notes are an essential part of financial counselling. They are required for evidence, handover, insurance and recollection. Records should be focused on client contact and information pertinent to service provision.

• FCA presented their work building guidelines with ASIC for Financial Counsellors to help understand their responsibilities for ethical practices regarding advice. Guides will be released via FCA in the coming weeks and detail the types of advice financial counsellors can give as well as how it should be captured in case notes.